Bitcoin vs Stablecoins: The True Path to Financial Freedom

• Stablecoins in Modern Monetary Situations
• Defining Freedom and Monetary Independence
• Breaking Down Political Theories of Freedom
• Understanding Freedom: An Analogy
• Stablecoins and Their Limitations
• Stablecoins and Financial Dominance
• Bitcoin and Freedom from Domination
• Conclusion

Stablecoins in Modern Monetary Situations

In recent times, stablecoins such as Tether$1.000 -0.12%'s USDT and Circle's USDC have shown their importance in real-world monetary situations. High inflation in countries like Turkey has driven individuals to embrace these digital assets as an effective hedge against their fluctuating national currency. These stablecoins offer potential liberation from the constraints of traditional financial systems. However, their actual ability to deliver on this promise is dependent on how one defines freedom. Analyzing stablecoins through various definitions of freedom found in political science literature reveals shortfalls in this new form of money.

Defining Freedom and Monetary Independence

To accurately understand why stablecoins do not live up to expectations of personal liberty and how Bitcoin$42,260 -0.64% (BTC) does, it is useful to explore how political philosophers define freedom. Starting with Anglo-Russian political theorist, Isaiah Berlin's essay Two Concepts of Liberty, we find that freedom can primarily be understood in two ways: positive and negative. Negative or liberal freedom refers to an absence of interference or barriers. In contrast, positive freedom focuses on the active exercise of freedom to realize a goal or potential.

Breaking Down Political Theories of Freedom

In addition to negative and positive freedom, a third alternative exists, the republican or neo-roman freedom. This draws on both interpretations to discuss governance. Notable philosophers in this field such as Phillip Pettit and Quentin Skinner emphasize freedom as an absence of domination, consequently raising questions about freedom from dependence. They argue that true freedom does not exist when there is any arbitrary power that can interfere in one's life.

Understanding Freedom: An Analogy

To further understand these concepts of freedom, consider an analogy of a door. Negative freedom is akin to having a choice of many doors, while positive is the act of walking through a selected door. Republican freedom adds another dimension, akin to having several doors without a gatekeeper. From the republican perspective, even the potential of interference already limits one's freedom.

Stablecoins and Their Limitations

When viewed through these lenses, the problem with stablecoins becomes apparent. One could argue that stablecoins provide negative freedom, as there are minimal barriers to access these financial systems. However, the issue arises when we consider republican freedom or freedom without domination. Stablecoins are produced and controlled by centralized organizations, and their stability, accessibility, and users are dependent on these companies' choices. Importantly, this freedom is always at the discretion of the issuers.

Stablecoins and Financial Dominance

Numerous Turkish citizens, facing a national banking crisis and inflation, have turned to stablecoins, particularly USDT on Tron, to safeguard their wealth. At first glance, this seems appealing: Trust foreign companies instead of relying on the government to supervise banks. Yet, this only substitutes one form of authority for another. The issue of arbitrary power persists, regardless of whether the power is held by a government or a company, highlighting the essence of republican freedom. In such cases, individuals may still be under external control, having little to no influence over the processes that control their economic activities.

Bitcoin and Freedom from Domination

Contrarily, Bitcoin offers a genuinely decentralized solution, bringing us closer to the ideal of non-domination. Bitcoin's decentralized nature prevents the type of domination associated with the centralized structures of stablecoins or traditional finance. Every participant in the network can influence its decisions, reducing the risk of arbitrary power and embracing a more republican perspective of freedom.

Conclusion

While stablecoins may appear as a beacon of stability in tumultuous financial landscapes, their inherent dependence on centralized issuers undermines freedom as non-domination. Trading one form of control for another, be it a government or a corporation, is not sufficient for true financial independence. Genuine financial liberty comes not from exchanging chains, but from eliminating or controlling them.

Edited by Jonathan Stoker